A stock is expected to pay a dividend of 1 per share in two, Ask an Expert

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A stock is expected to pay a dividend of $1 per share in two months and again in five months. The stock price is $50 and the risk-free rate is 1% for all times.

An investor has taken a short position in a six-month forward contract on the stock.

What is the forward price? What is the initial value of this forward contract?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92834182

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